Market Roundup
- Trump casts doubt on planned summit with North Korean leader
- Trump floats management changes instead of sanctions for China's ZTE
- Congress eases post-crisis bank rules in victory for Trump
- Trump says he will propose new tax cuts prior to November
- Japan May Nikkei Mfg PMI Flash, 52.5, last 53.8
- Japan to set interim fiscal target to balance budget in FY2025 - Nikkei
- New Zealand c.bank prepared for quantitative easing, asset purchases in crisis
Economic Data Ahead
- (0330 ET/0730 GMT) Germany May Markit Mfg Flash PMI, f'cast 57.8, last 58.1
- (0330 ET/0730 GMT) Germany May Markit Service Flash PMI, f'cast 53.0, last 53.0
- (0330 ET/0730 GMT) Germany May Markit Comp Flash PMI, f'cast 54.7, last 54.6
- (0400 ET/0800 GMT) EZ May Markit Mfg Flash PMI, f'cast 56.0, last 56.2
- (0400 ET/0800 GMT) EZ May Markit Serv Flash PMI, f'cast 54.6, last 54.7
- (0400 ET/0800 GMT) EZ May Markit Comp Flash PMI, f'cast 55.0, last 55.1
- (0430 ET/0830 GMT) Great Britain Apr Core CPI YY, f'cast 2.2%, last 2.3%
- (0430 ET/0830 GMT) Great Britain Apr CPI YY, f'cast 2.5%, last 2.5%
- (0430 ET/0830 GMT) Great Britain Apr PPI Input Prices YY NSA, f'cast 5.8%, last 4.2%
- (0430 ET/0830 GMT) Great Britain Apr PPI Output Prices YY NSA, f'cast 2.3%, last 2.4%
- (1000 ET/1400 GMT) EZ May Consumer Confid. Flash, f'cast 0.40, last 0.40
Key Events Ahead
- (0500 ET/0900 GMT) ECB's Angeloni participates at 2018 IIF Spring Meeting organized by the Institute of International Finance in Brussels
- (1400 ET/1800 GMT) FOMC will release minutes from its May 1-2 policy meeting
- (1415 ET/1815 GMT) Fed's Kashkari participates in a moderated question-and-answer session on "New Energy Economic Reality" before the Williston Basin Petroleum Conference
- N/A Latvia EUR 10-year global benchmark via CITI, JP Morgan, Natixis
FX Beat
DXY: The dollar index steadied as investors awaited the minutes of the Federal Reserve's last policy meeting for fresh clues on the pace of further U.S. monetary tightening. The greenback against a basket of currencies trades 0.1 percent up at 93.69, having touched a high of 94.06 on Monday, its highest since Dec. 13. FxWirePro's Hourly Dollar Strength Index stood at -15.46 (Neutral) by 0500 GMT.
EUR/USD: The euro eased, extending previous session losses, amid political uncertainty in Italy as the heavily indebted nation will be governed by anti-establishment 5-Star Movement and the far-right League. The European currency traded 0.1 percent down at 1.1765, having touched a low of 1.1716 on Monday, its lowest since Dec. 18. FxWirePro's Hourly Euro Strength Index stood at -33.67 (Neutral) by 0500 GMT. Investors’ attention will remain on the German and Eurozone preliminary PMI numbers, ahead of the U.S. prelim Markit PMI's, new home sales and Fed officials' speeches. Immediate resistance is located at 1.1841 (10-DMA), a break above targets 1.1938 (May 15 High). On the downside, support is seen at 1.1736 (Dec. 18 Low), a break below could drag it till 1.1717 (Dec. 12 Low).
USD/JPY: The dollar fell to a 6-day low against the yen as the 10-year U.S. Treasury yield eased 1.5 basis points at 3.05 percent. Moreover, news that President Trump is displeased with recent trade talks between the United States and China boosted demand for the risk-haven assets. The major was trading 0.4 percent down at 110.46, having hit a high of 111.39 on Monday, its highest since Jan. 18. FxWirePro's Hourly Yen Strength Index stood at 89.51 (Slightly Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. prelim Markit PMI's, new home sales and Fed officials' speeches. Immediate resistance is located at 111.48 (Jan. 18 High), a break above targets 111.87 (Jan. 11 High). On the downside, support is seen at 110.22 (10-DMA), a break below could take it lower 109.72 (21-DMA).
GBP/USD: Sterling consolidated near 5-month lows ahead of the inflation figures due later in the day that could provide clues whether the Bank of England might tighten monetary policy as early as August. On Tuesday, the major rebounded from recent lows after BoE policymaker Gertjan Vlieghe stated that policy rates are set to rise 25 to 50 basis points every year over three years. The major traded 0.2 percent high at 1.3407, having hit a low of 1.3391 on Monday, it’s lowest since Dec. 27. FxWirePro's Hourly Sterling Strength Index stood at -109.29 (Highly Bearish) by 0500 GMT. Investors’ focus will remain on the UK retail price index, producer price index and consumer price index, ahead of U.S. fundamental drivers. Immediate resistance is located at 1.3496 (10-DMA), a break above could take it near 1.3569. On the downside, support is seen at 1.3346, a break below targets 1.3301. Against the euro, the pound was trading 0.1 percent down at 87.75 pence, having hit a high of 87.12 pence on Thursday, it’s highest since Apr. 27.
AUD/USD: The Australian dollar eased, retreating from a near 1-month peak hit in the previous session after U.S. President Donald Trump tempered optimism over the progress made so far in easing tariff tensions with China. Moreover, data released earlier showed Australia's construction spending rose by a smaller-than-expected 0.2 percent in the first quarter, below expectations for a rise of 1 percent. The Aussie trades 0.4 percent down at 0.7542, having hit a high of 0.7605 On Tuesday; it’s highest since Apr. 25. FxWirePro's Hourly Aussie Strength Index stood at 138.28 (Highly Bullish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7521 (10-DMA), a break below targets 0.7472 (May 1 Low). On the upside, resistance is located at 0.7605 (May 22 High), a break above could take it near 0.7682 (Apr. 23 High).
NZD/USD: The New Zealand dollar slumped after Reserve Bank of New Zealand Assistant Governor John McDermott stated that the central bank could reduce cash rates to below zero and engage in asset buying programmes in case of a major crisis. The major trades 0.4 percent down at 0.6903, having touched a high of 0.6959 earlier, its highest level since May 14. FxWirePro's Hourly Kiwi Strength Index was at 128.13 (Highly Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6974, a break above could take it near 0.7030. On the downside, support is seen at 0.6835, a break below could drag it below 0.6805.
Equities Recap
Asian shares declined, weighed down by risk-off sentiment after U.S. President Donald Trump tempered optimism over progress made so far in trade talks between U.S. and China.
MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.2 percent in early trade.
Tokyo's Nikkei eased 1.2 percent to 22,694.53 points, Australia's S&P/ASX 200 index declined 0.2 percent to 6,032.50 points and South Korea's KOSPI surged 0.4 percent to 2,474.14 points.
Shanghai composite index fell 1.05 percent to 3,180.59 points, while CSI300 index was trading 0.9 percent down at 3,869.18 points.
Hong Kong’s Hang Seng was trading 1.0 percent lower at 30,925.64 points. Taiwan shares shed 0.5 percent to 10,886.18 points.
Commodities Recap
Crude oil prices declined with the possibility of increasing OPEC output weighing on the market, however, geopolitical risks kept prices near multi-year highs. International benchmark Brent crude was trading 0.5 percent down at $79.04 per barrel by 0455 GMT, having hit a high of $80.47 on Thursday, its highest since Nov. 2014. U.S. West Texas Intermediate was trading 0.3 percent down at $71.90 a barrel, after rising as high as $72.28 on Thursday, its highest since Nov. 2014.
Gold prices rose amid a strong dollar and uncertainty over the outcome of U.S.-China trade talks, while investors awaited minutes from the Federal Reserve's meeting for clues on the outlook for U.S. interest rates. Spot gold was 0.1 percent up at $1,292.25 per ounce, as of 0457 GMT, having hit a low of $1,281.99 on Monday, its lowest price level since Dec. 27. U.S. gold futures for June delivery were unchanged at $1,291.90 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 3.050 percent lower by 0.015 bps, while 5-year yield was 0.011 bps down at 2.888 percent.
The Australian government bond futures gained, with the three-year bond contract up 1.5 ticks at 97.770. The 10-year contract rose 2 ticks to 97.145.
The New Zealand government bonds rose, sending yields about 2 basis points lower.
The Canadian government bond prices were lower across a flatter yield curve as trading resumed following Monday's Victoria Day holiday. The 2-year fell 2 Canadian cents to yield 2.043 percent and the 10-year declined 3.5 Canadian cents to yield 2.490 percent.
